High credit card interest rates led the Chamber of Deputies and the Central Bank (BC) to rethink rules for providing the service.
Today, according to the National Association of Finance Executives (Anefac), the interest on the card’s so-called revolving credit is 425% per year on average. This is more than triple the average interest rate on credit operations in the country. It also means that a card user’s debt increases fivefold in one year if it is not paid.
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The interest on revolving credit is those that update the debt of customers who do not pay the full card bill at the end of a given month.
The Chamber of Deputies approved this Monday (4) the urgency of a bill to limit this rate by the National Monetary Council (CMN). The council is today formed by the Minister of Finance, Fernando Haddad (PT), the Minister of Planning, Simone Tebet (MDB), and the president of the BC, Roberto Campos Neto.
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According to the preliminary opinion on the project, the CMN would receive a proposal for the limit rate from card operators and would have up to 90 days to analyze it. If the limit were not agreed, a standard rate would automatically be implemented: the total interest and charges charged cannot exceed the original amount of the debt.
The economist and coordinator of the Financial Services Program at the Brazilian Institute for Consumer Protection (Idec), Ione Amorim, stated that this pre-established limit is based on a rule that works in the United Kingdom. He explained that, there, if a customer borrows £100, they will pay a maximum of £200 – 100% interest.
For her, action needs to be taken on the “exorbitant” interest rates.
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Economist Miguel de Oliveira, executive director of Anefac, agrees with the need for limitations. He recalled that interest on special checks was limited to 8% per month in 2020. For him, it worked. Banks today already charge less than 8%. “There were general complaints from the banks, they said they were going to end the modality, but nothing happened,” he said.
“Only the limitation will lower revolving interest rates. If taxes don’t come, it won’t happen,” added Oliveira, who also sees bank abuses.
The bill that limits interest is from deputy Elmar Nascimento (União-BA). The rapporteur of the proposal is deputy Alencar Santana (PT-SP).
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Portability and Unrolls
The rapporteur also included in the project the entire text of the Provisional Measure (MP) that creates the Desenrola Brasil Program in order to encourage the renegotiation of debts, offering guarantees for those of small value (up to R$5,000).
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He also predicted the portability of credit card debt and other debts related to it, even those already paid in installments by the card itself. Thus, the consumer will be able to seek lower interest offers to settle their debt.
The idea is to stimulate competition between card issuers.
Payment in installments
The president of the BC has also defended the end of the credit card rotation. He, in fact, even criticized interest-free installments on card purchases. This type of purchase is common in Brazil, but it almost does not exist abroad.
According to Campos Neto, it has costs that end up putting pressure on the general interest charged by credit card operators. He assured that there is no proposal to put an end to this form of payment.
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Oliveira, from Anefac, said that the relationship between parliament and interest rates is not as clear as Campos Neto argues, especially taking into account the level of revolving rates. The economist, in fact, is against the end of the interest-free parliament. “This would affect commerce, those who sell stoves and refrigerators,” he explained. “The population cannot pay R$500 on their card. They pay in five installments of R$100.”
*With information from Agência Câmara
Editing: Thalita Pires